Cable Set-Top Box Arguments: Nothing But Reruns

It is inevitable that right before a major filing on an issue that the cable guys HATE!!! with all the passion of an injured monopolist, the we see a flurry of distracting nonsense designed to fuzzle the FCC, generate bad trade press, stoke the wholly-owned subsidiaries in Congress, and provide more material for the chanting cheerleader chorus. You may remember this from 2014’s: “Net Neutrality — The FCC Is Totally Gonna Lose On Banning Paid Prioritization,” and its 2015 Sequel: “No Wait, We Were Totally Lying Last Time, Banning Paid Prioritization is Cool But The FCC Is Totally Gonna Lose on Title II.”


Meanwhile, Comcast steps up with some “deal” that supposedly totally solves the problem they say doesn’t exist anyway so now there is no reason to do anything. In net neutrality, that was “look, we cut a deal with Netflix so you don’t need that silly old net neutrality.”


So it is no surprise that in 2016 we see another rerun. With comments on the FCC’s wildly popular (outside the Beltway) #unlockthebox rulemaking going on, aka the “Expanding Consumer’s Video Navigation Choices” proceeding due tomorrow, the cable industry has run true to form. Yesterday, Comcast announced it would make an ap available to Roku to let consumers stream Comcast content (under Comcast’s licensing terms, subject to Comcast control, and only to those Comcast finds sufficiently non-threatening). The fact that Comcast was messing around with the HBO Go ap on Playstation just last year  has not stopped the usual chorus of useful idiots from chanting hosannah’s of praise and declaring the problem solved. (Hopefully I will get to deal with everything wrong with the ap approach in a future post. But the short version is: “swapping one thing Comcast controls for something else Comcast controls is not “solving the problem.”)


But perhaps more importantly, we now come to the inevitable second act of this  well worn cable rerun. The press call headed by NCTA CEO Michael Powell with a panel of high power corporate lawyers who will trot out the same arguments they always do on why the FCC is totally gonna lose. I am eternally mystified why anyone takes this seriously because Duh, what else do you expect the cable guys to say? “Oh yeah, we don’t have a legal leg to stand on and the FCC is totally going to win. Damn, I knew I shouldn’t have drunk that bottle labeled Veritaserum!”

Nevertheless, for some reason, pronouncements by lawyers paid to make such pronouncements seem to have some mind clouding effect which not only makes people forget all the previous times these people have made exactly the same prediction, but forget the actual FCC detailed refutation of these arguments in the notice of proposed rulemaking. So once again, we here at Tales of the Sausage Factory will play the part of the annoying little dog exposing the man behind the curtain while everyone else trembles at the Great and Powerful Oz — played here by NCTA CEO Michael Powell.


Curtain pulled back bellow . . .

First, it’s important to recognize that the cable folks were already in front of the D.C. Circuit three times on this issue, and lost each time. See General Instrument Corp. v. FCC, 213 F.3d  724 (D.C. Cir. 2000); Charter Communications Corp. v. FCC, 460 F.3d 31 (D.C. Cir. 2006); and Comcast Corp. v. FCC.  In each of these cases, the cable industry made similar statutory arguments about the limits of FCC authority in Section 629. On each occasion, the D.C. Cir. — which was a lot more pro-business and anti-FCC back then, rejected them.


Despite being 0-3 on all challenges to the FCC’s 629 rules to date, NCTA’s cadre of lawyers assures us that this time will be totally different because FCC, overreach, regulation, power mad, Title II, Google too, Leonard Bernstein Leonid Brezhnev, Lenny Bruce, and Tom Wheeler END OF THE WORLD AS WE KNOW IT!! Or something like that.


But Hell, let’s just go through the arguments and knock them down quickly. I’ll go into more detail when the inevitable response from the Cable’s Team Rocket and Meowth pops up.


Constitutional arguments — 1st Amendment and 5th Amendment takings. Y’all have noticed that this gets raised every time the FCC does anything right? Hopefully, y’all have also noticed that the courts routinely reject these arguments because they have no basis in actual legal theory or precedent. But whatevs. The cable guys believe they have a constitutional right to screw over competitors and that promoting competition is a “takings” of their market power or some such. No matter how many times the cable guys lose this argument, they still put it out there with the same religious belief that I have every year when I put out the Cup of Elijah for the Passover seder. The difference being that no reporter ever believes me that Elijah is gonna actually stop by this year.


Exceeds the Scope of Section 629. Unsurprisingly, this was precisely the argument that the cable guys raised in when the FCC required the cable operators to make available one, standard, non-integrated security module aka Cablecard. You can see an old blog post of mine outlining the issue here. The D.C. Circuit in General Instrument Corp. rejected the argument that the FCC acted impermissibly in making cable operators isolate a feature (there, security, here, programing information), and make it available in standardized form to independent 3rd parties. The D.C. Circuit went even further in Charter, observing that the statute directed the FCC to “assure the commercial availability” competing devices. Since the FCC reasonably concluded that requiring cable operators to use a standard interface for security and make it available to all competing device manufacturers was necessary to “assure the commercial availability” of competing devices, the D.C. Circuit affirmed the FCC’s use of Cablecard.


Just to remind everyone, the whole point of the existing FCC proceeding is to develop the successor to Cablecard. Congress in 2014 mandated the FCC to phase out the security integration ban (i.e., the thing that made Cablecard necessary) and come up with an alternative technology that would be downloadable and work two-ways and would finally make devices commercially available and stuff. It’s hard to see why an argument the D.C. Circuit rejected (twice) on Cablecard will suddenly magically work on the third try for the successor to Cablecard that Congress mandated the FCC to develop. But whatevs, cable lawyers said it in a very serious voice and the Cheerleader Chorus sang triumphant Hallelujah’s, so why shouldn’t people believe in miracles.


Hey, maybe this year Elijah will stay to chat after he chugs his vino. I figure that’s just as likely.


The next argument on the basis of the statute is that the FCC would violate the provision 629(b) that the FCC can’t jeopardize the security of the services offered by cable. Again, the cable industry made exactly the same freaking argument in General Instrument Corp. 16 years ago. The D.C. Circuit rejected it, saying — and I am paraphrasing here — “just because you guys keep saying this compromises security doesn’t make it true.  Get. Over. Yourselves.”


Since this is a fact-based argument rather than a legal argument it is not utterly impossible that the cable industry could win if the FCC mandated a standard that compromised security. However, the FCC is not doing that. It’s requiring that a standards body that is not CableLabs or some other standards body controlled by all the people who want to maintain monopoly control of set-top boxes so they can keep overcharging consumers $20 billion a year develop a standard that, among other things, doesn’t jeopardize security. An argument that relies on “Well separating this out just naturally compromises security because it just does and I will keep repeating that it does because Chris Christy was totally right about that Washington DC thing were people mechanically repeat their talking points in the face of all evidence to the contrary and did we mention this order that hasn’t even come out yet compromises security because it does” was already rejected by the D.C. Circuit. Call me crazy, but unless Ted Olson and Helgi Walker are gifted with the power of prophecy, I don’t see how they can say that any standard the FCC comes up with automatically jeopardizes security as a matter of law.


The FCC’s Proposal Violates Other Provisions of the Statute. These arguments are sort of amusing because they begin to border on genuine incoherence.

Section 624(f). Somehow, requiring cable operators to share metadata from their programming guide violates the statutory restriction on making or prohibiting cable operators particular content. Even if we could accept that somehow “creating an interface that provides independent devices with the same information stream you provide your device” was a content regulation, this argument would still fail because, the next few words of the statute say “except as expressly provided in this title.”  As the observant legal reading person will note, Section 629 is, in fact, in the same Title (Title VI) as Section 624(f). Which means that if the FCC is right about its interpretation of Section 629 as authorizing its #unlockthebox proposal, then it is permissible under Section 624(f) (if that provision actually applied, which it doesn’t, because, as noted in the rejecting the First Amendment argument, this isn’t a regulation of speech/content). If Section 629 doesn’t authorize it, then we never reach 624(f) in the first place.



Section 621(c). In what has become the go to argument for cable operators, anything they don’t like is treating them like a common carrier. Since lots of things that aren’t common carriers can be required by the FCC to adopt standard protocols, interfaces, or other forms of standardized access (for example, mandating that all TV’s must have a digital tuner), this argument fails the test set forth in the data roaming case for what constitutes a “core” common carriage obligation.


But it fails for a more fundamental reason. If Congress explicitly tells the FCC to do something, that overrides the general common carrier prohibition. This whole “common carrier prohibition” thing started when the Supreme Court overruled the FCC’s original leased access rules (requiring cable operators to set aside channels for independent people to lease) as being a common carrier. So then Congress mandated leased access as part of the 1984 Cable Act. Despite the 1984 Cable Act also containing a prohibition on treating cable operators as common carriers, the specific provision about leased access overrode the general prohibition on treating cable operators as common carriers.


So, once again, the cable industry has it ass-backwards. It is not that Section 621(c) overrules an FCC regulation that is authorized by Section 629 because it “treats cable like a common carrier.” To the contrary, even if Section 629 imposed a common carrier obligation, which it does not, the fact that Section 629 explicitly mandates that the FCC create rules to “assure commercial availability” of devices that can substitute for a set-top box, then that specific mandate overrules the general prohibition on treating cable and as a common carrier does — just like leased access (Section 612), must carry (Sections 614, 615) and PEG (Section 621) all impose common carrier-like obligations on cable operators.


Section 631 (cable privacy). Cable operators claim this “erodes” the protection of consumer privacy of cable set-top box information.


Oh cable operators, I am so glad you brought up cable set-top box privacy. And I just read this fascinating report by Jeff Chester at Center for Digital Democracy about how Comcast and all the other cable operators are violating the shit out Section 631 by harvesting consumer data without express consent (the statute requires “express consent” aka opt in. To the extent cable operators are making any information about their harvesting data from the set top boxes available to their customers at all, they are relying on opt out.


But lets set aside for the moment that on privacy this is yet-another-case where cable is much less interested in protecting consumer welfare than in preserving its monopoly over its customers. As we will argue in the actual set top box comments, the FCC can (and should) apply the cable privacy rules directly to any STB provider that wants to spy on its customers data without consent.


Also, as long we are on the subject of cable hypocrisy about privacy, can Comcast explain exactly how it is totally ok from both a privacy and a copyright perspective for them to make this information available to Roku with their new “virtual set top box,” but not o.k. to standardize that and make it available to everyone? Cause from here, it looks like your privacy arguments and copyright arguments boil down to “bad things only happen if we lose monopoly control. We cable companies can be totally trusted to make this available in the way the FCC describes as long as we can still maintain our monopoly. But somehow, anything that would introduce real competition angers the Gods of the Marketplace and they shall set plagues of piracy and privacy to punish you!”


And this year, not only is Elijah going to actually show up to drink the cup of Elijah and hang around to chat, but he and I are totally gonna be buds. Youbetcha.


Various bullshit copyright arguments. Again, Cablecard was already making the actual content available to third party devices. Somehow, that didn’t violate anybody’s copyright or licensing agreements. But making the metadata for programming guides available will somehow magically change things.


As my colleague Kate Forcey explains in more detail over here, this is another one of those perennial arguments that people seem to believe despite every single piece of real world evidence proving it is bullshit. Because copyright. As I noted already, what does the FCC’s proposal actual require that isn’t already required by Cablecard that would impact copyright? Yes, it would impact cable operators illegal use of channel placement to punish independent programmers who refuse to sell equity interests to cable (like Bloomberg News), but that’s not a violation of copyright.


Again, I expect that Hollywood believes this with the same religious fervor that you find in snake handlers who refuse anti-venom when bit. But this fervent belief and non-stop repetition is not actually a legal argument.


The rest of the arguments boil down to “but the FCC is sooooo stupid to want to do this that no court would let it stand.” More formally, the Cable Industry repeats its usual argument that no, this isn’t a monopoly. Consumers just pay us $20 billion in overcharges a year because their hearts are so filled with love for their cable companies. Heck, consumers would be disappointed if we didn’t let them pay us ridiculously high rental fees we raise every year. The fact that 99% of consumers rent a set top box isn’t proof of market power, it’s proof of consumer love.




I confess, given that the cable guys are 0-3 in front of the D.C. Circuit on Section 629, I am rather looking forward to getting this rule out and getting to the legal challenges.  In the meantime, we will have to sit through yet another lame remake of the same TV show — Cable Guys have serious lawyers use serious lawyer voice to explain why they are totally gonna win. Personally, I don’t know why so many people keep tuning into the same crap. But I also don’t get why people like Jackass either.


Stay tuned . . .


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